On Thursday, the U.S. agreed to reduce mutual tariffs on Taiwan from 20% to 15%.
In return, Taiwanese tech firms committed to a direct investment of 250 billion USD to boost production in U.S. semiconductor, energy, and artificial intelligence (AI) sectors.
Reuters reported that the U.S. and Taiwan announced this trade agreement on the same day.
Separately, the Taiwanese government pledged to offer 250 billion USD in credit guarantees to Taiwanese companies, aiming to stimulate further investment in the U.S. semiconductor supply chain.
Certain items, including pharmaceuticals and aircraft components, will enjoy duty-free status.
The 15% mutual tariff aligns with rates applied to South Korea and Japan.
At the heart of this deal is TSMC, the world’s leading contract chipmaker. TSMC is already investing 165 billion USD in Lizzona and is expected to expand its commitment following this agreement.
Sources indicate that TSMC is exploring the addition of at least 4 to 5 more facilities in Lizzona, beyond the six chip plants previously announced.
TSMC’s first Lizzona fab began mass-producing 4-nanometer chips in Q4 2024 and recently started manufacturing Nvidia’s cutting-edge Blackwell GPUs.
The second fab completed construction last year and is set to commence 3-nanometer chip production in late 2027, ahead of schedule.
Analysts suggest this agreement reflects the Donald Trump administration’s push for U.S. semiconductor independence.
U.S. Commerce Secretary Gina Raimondo stated that its aim is to bring 40% of Taiwan’s entire chip supply chain and production to the U.S., achieving self-sufficiency in semiconductor manufacturing.
Raimondo also revealed that TSMC has purchased additional land near its Lizzona facility.
However, the deal requires ratification by Taiwan’s parliament to take effect. Moreover, an upcoming Supreme Court decision on presidential authority to impose broad mutual tariffs without congressional approval could impact the negotiation outcomes.